SHARE REPURCHASES AND FIRM BEHAVIOR

Adri de Ridder ()
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Adri de Ridder: Gotland University, Visby, Sweden

International Journal of Theoretical and Applied Finance (IJTAF), 2009, vol. 12, issue 05, 605-631

Abstract: Share repurchases have become an increasingly popular method for companies to distribute cash to its shareholders as many countries have removed restrictions related to this activity. By using a new and unique data set with complete information of each repurchase program, the long-run share price performance following actual share repurchases and whether managers trade strategically are examined for a sample of Swedish firms. I find that the announcement effect surrounding the first repurchase date is small but that repurchasing firms on average outperform several benchmarks during the first three years and thereby exhibit superior information of the stock price. Evidence of strategic trading is documented in small market cap firms. Finally, I document that Swedish firms repurchase more in the first half compared to the second half of the program and also that a higher completion rate is associated with high abnormal return.

Keywords: Buy-backs; long-run performance; strategic trading; market efficiency; undervaluation; completion rate; Sweden (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (4)

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DOI: 10.1142/S0219024909005427

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